chapter 87a hawaii employer-union health benefits trust fund

CHAPTER 87A

HAWAII EMPLOYER-UNION HEALTH BENEFITS TRUST FUND

Part I. General Provisions

Section

87A-1 Definitions

Part II. Board of Trustees

87A-5 Composition of board

87A-6 Term of a trustee; vacancy

87A-7 Chair, vice-chair, and secretary-treasurer

87A-8 Compensation and expenses

87A-9 Legal adviser

87A-10 Meetings; notice

87A-11 Quorum; board actions; voting

87A-12 Records and minutes

Part III. Board Powers and Duties

87A-15 Administration of the fund

87A-16 Health benefits plan; carriers

87A-16.3 Prescription drugs; mail order opt out option

87A-17 Group life insurance benefits or group life

insurance

program

87A-18 Long-term care benefits plan; carrier or third-

party

administrator

87A-19 Plans for part-time, temporary, and seasonal or

casual

employees

87A-20 Repealed

87A-21 Eligibility

87A-22 Benefits plan information and enrollment

87A-23 Health benefits plan supplemental to medicare

87A-24 Other powers

87A-25 Other duties

87A-26 Rules; policies, standards, and procedures

87A-27 Actuarial investigation; valuations

Part IV. Trust Fund

1

Updated 12/13/19 (from Legislative Website dated 12/09/19)

87A-30 Hawaii employer-union health benefits trust

fund;

establishment

87A-31 Trust fund; purpose

87A-31.1 Public employers; defined

87A-31.5 Employer contributions irrevocable

87A-32 State and county contributions; active

employees

87A-33 State and county contributions; retired

employees

87A-33.5 State and county contribution; reimbursement

for

retired employees

87A-34 State and county contributions; retired

employees with

fewer than ten years of service

87A-35 State and county contributions; employees hired

after

June 30, 1996, but before July 1, 2001, and

retired

with fewer than twenty-five years of service

87A-36 State and county contributions; employees hired

after

June 30, 2001, and retired

87A-37 Group life insurance benefits plans for retired

employees; contributions

87A-38 State and county contributions not considered

wages or

salary

87A-39 Reimbursement for state contributions

87A-40 Employee-beneficiary contributions; health

benefit

plans

87A-41 Employee-beneficiary or qualified-beneficiary

contributions; long-term care benefits plan

87A-42 Other post-employment benefits trust

87A-43 Payment of public employer contributions to the

other

post-employment benefits trust

Note

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Applicability of the following to health benefits plans

under this chapter:

(1) Coverage for annual screenings of sexually

transmitted diseases, including screenings for human

immunodeficiency virus and acquired immunodeficiency

syndrome, required by L 2016, c 204. L 2016, c 204, §6;

(2) Nondiscrimination provisions required by L 2016, c

135. L 2016, c 135, §5;

(3) Reimbursement for prescription contraceptive

supplies required by L 2016, c 205. L 2016, c 205, §4;

and

(4) Requirement for reimbursement for telehealth

services by L 2016, c 226. L 2016, c 226, §13.

Changes to personnel and operations as a result of

authorization to employ staff through the civil service

system; reports to 2018-2019 legislature. L 2017, c 145,

§4.

Cross References

Hawaii health authority, see chapter 322H.

Health and dental insurance data; mandatory reporting

for certain insurers, see §323D-18.5.

Prescription drug benefits, see chapter 431R.

Case Notes

This chapter's use of general trust language does not

impose upon the trustees all of the common law fiduciary

duties; although this chapter does not use "discretion"

in requiring the board to decide upon the structure of

the health benefits plan, the legislature clearly

intended that the board have broad discretion in its

design; where trustees expressed concern regarding the

impact a change to a three- or four-tier structure would

have on the collective bargaining process, and also

determined that the two-tiered structure would have a

negative impact on the smallest percentage of plan

participants, trustees did not abuse their

discretion. 115 H. 126, 165 P.3d 1027.

3


The words "similarly situated beneficiary not eligible

for medicare", as those words are used in §87A-23(1), or

"similarly situated employee-beneficiary not eligible for

medicare", as those words are used in §87A-23(3), invoke

a comparison between medicare eligible retirees and

retirees who do not qualify for medicare; thus, this

chapter does not require the board of the employer-union

health benefits trust fund to provide health benefits

plans to retirees whose benefits "reasonably approximate"

those benefits provided to active employees. 122 H. 402,

228 P.3d 282.

PART I. GENERAL PROVISIONS

§87A-1 Definitions. As used in this chapter:

"Board" means the board of trustees of the Hawaii

employer-union health benefits trust fund described in

section 87A-5.

"Carrier" means a voluntary association,

corporation, partnership, or organization engaged in

providing, paying for, arranging for, or reimbursing the

cost of, health benefits or long-term care benefits under

group insurance contracts.

"Contribution" means money payments made to the fund

by the State, the counties, an employee-beneficiary, or a

qualified-beneficiary.

"County" means the counties of Hawaii, Honolulu,

Kauai, and Maui, including their respective boards of

water supply and other quasi-independent boards,

commissions, and agencies.

"Credited service" means service as an officer or

employee paid by the State or county, service during the

period of leave of absence or exchange if the individual

is paid by the State or county during the leave of

absence or exchange, and service during the period of

unpaid leave of absence or exchange if the individual is

engaged in the performance of a governmental function or

if the unpaid leave of absence is an approved leave of

absence for professional improvement.

4


"Dependent-beneficiary" means an employee-

beneficiary's:

(1) Spouse;

(2) Child deemed eligible by the board, including a legally adopted child,

stepchild, foster child, or recognized natural child, but excluding a child born or

legally adopted more than ten months after the date of the death of:

(A) An active employee killed in the

performance of duty;

(B) An active employee who was eligible to

retire on the date of death; or

(C) A retired employee-beneficiary; and

(3) Unmarried child regardless of age who is incapable of self-support because of

a mental or physical incapacity, which existed prior to the unmarried child's reaching

the age of nineteen years.

"Employee" means an employee or officer of the

State, county, or legislature,

(1) Including:

(A) An elective officer;

(B) An officer or employee under an authorized

leave of absence;

(C) An employee of the Hawaii national guard

although paid from federal funds;

(D) A retired member of the employees'

retirement system; the county pension

system; or the police, firefighters, or

bandsmen pension system of the State or

county;

(E) A salaried and full-time member of a

board, commission, or agency appointed by

the governor or the mayor of a county; and

(F) A person employed by contract for a period

not exceeding one year, where the director

of human resources development, personnel

services, or civil service has certified

5


that the service is essential or needed in

the public interest and that, because of

circumstances surrounding its fulfillment,

personnel to perform the service cannot be

obtained through normal civil service

recruitment procedures,

(2) But excluding:

(A) A designated beneficiary of a retired

member of the employees' retirement system;

the county pension system; or the police,

firefighters, or bandsmen pension system of

the State or county;

(B) Except as allowed under paragraph (1)(F),

a person employed temporarily on a fee or

contract basis; and

(C) A part-time, temporary, and seasonal or

casual employee.

"Employee-beneficiary" means:

(1) An employee;

(2) The beneficiary of an employee who is killed in the performance of the

employee's duty, including:

(A) The surviving child, if there is no

surviving parent who is eligible to be an

employee-beneficiary and the child is

unmarried and under the limiting age as

defined by the board; and

(B) The surviving spouse, if the surviving

spouse does not subsequently remarry;

(3) An employee who retired prior to 1961; and

(4) The beneficiary of a retired member of the employees' retirement system; a

county pension system; or a police, firefighters, or bandsmen pension system of the

State or a county, upon the death of the retired member, including:

6


(A) The surviving child, if there is no

surviving parent who is eligible to be an

employee-beneficiary and the child is

unmarried and under the limiting age as

defined by the board; and

(B) The surviving spouse, if the surviving

spouse does not subsequently remarry;

provided that the employee, the employee's beneficiary,

or the beneficiary of the deceased retired employee is

deemed eligible by the board to participate in a health

benefits plan or long-term care benefits plan under this

chapter.

"Fund" means the Hawaii employer-union health

benefits trust fund established in section 87A-30.

"Health benefits plan" means:

(1) A group insurance contract or service agreement that may include medical,

hospital, surgical, prescribed drugs, vision, and dental services, in which a carrier

agrees to provide, pay for, arrange for, or reimburse the cost of the services as

determined by the board; or

(2) A similar schedule of benefits established by the board and provided through

the fund on a self-insured basis.

"Long-term care benefits plan" means:

(1) A group insurance contract or service agreement in which a carrier agrees to

provide, pay for, arrange for, or reimburse the cost of long-term care benefits as

determined by the board; or

(2) A similar schedule of benefits established by the board and provided through

the fund on a self-insured basis.

"Part-time, temporary, and seasonal or casual

employee" means a person employed for fewer than three

months or whose employment is less than one-half of a

full-time equivalent position.

"Periodic charge" means the periodic payment by the

board to a carrier for any health benefits plan or long-

term care benefits plan.

7


"Qualified-beneficiary" means, for purposes of the

long-term care benefits plan, a former employee or an

employee who is not eligible for benefits due to a

reduction in work hours, including the spouse, divorced

spouse, parents, grandparents, in-law parents, and in-law

grandparents of an employee or retiree; provided that the

beneficiary was enrolled in the plan before the employee

or former employee became ineligible for benefits.

"State agency" includes the office of Hawaiian

affairs.

"Trustee" means a trustee of the board of trustees

of the Hawaii employer-union health benefits trust fund,

as described in section 87A-5. [L 2001, c 88, pt of §1;

am L 2003, c 152, §1; am L 2012, c 36, §1; am L 2019, c

51, §2]

PART II. BOARD OF TRUSTEES

§87A-5 Composition of board. [See explanatory note

below.] The board of trustees of the employer-union

health benefits trust fund shall consist of ten trustees

appointed by the governor in accordance with the

following procedure:

(1) Five trustees, one of whom shall represent

retirees, to represent employee-beneficiaries and to be

selected as follows:

(A) Three trustees shall be appointed from a

list of two nominees per trustee selected by

each of the three exclusive representative

organizations that have the largest number

of employee-beneficiaries;

(B) One trustee shall be appointed from a list

of two nominees selected by mutual agreement

of the remaining exclusive employee

representative organizations; and

(C) One trustee representing retirees shall be

appointed from a list of two nominees

selected by mutual agreement of all eligible

exclusive representatives; and

8


(2) Five trustees to represent public employers.

Section 26-34 shall not apply to board member

selection and terms. Notwithstanding any other provision

of this section, no exclusive representative of a

bargaining unit that sponsors or participates in a

voluntary employee beneficiary association shall be

eligible to select nominees or to be represented by a

trustee on the board.

As used in this section, the term "exclusive

representative" shall have the same meaning as in section

89-2. [L 2001, c 88, pt of §1; am L 2005, c 250, §1]

Explanatory Note

L 2005, c 250 amendment. The legislature concluded

that the governor's proclamation indicating the

governor's intent to return H.B. No. 1548 was

constitutionally defective and that said measure became

law. On July 13, 2005, the legislature assigned Act 250

to H.B. No. 1548. The attorney general has taken the

position that H.B. No. 1548 did not become law.

§87A-6 Term of a trustee; vacancy. [See explanatory

note below.] The term of office of each trustee shall be

four years; provided that a trustee may be reappointed

for one additional consecutive four-year term.

A vacancy on the board shall be filled in the same

manner as the trustee who vacated that position was

nominated or appointed; provided that the criteria used

for nominating or appointing the successor shall be the

same criteria used for nominating or appointing the

person's predecessor; provided further that vacancies on

the board for each trustee position representing retirees

and employee-beneficiaries appointed under section 87A-

5(1)(A) and (B) shall be filled by appointment of the

governor as follows:

(1) If a vacancy occurs in one of the trustee positions described in section 87A-

5(1)(A), then the vacancy shall be appointed from a list of two nominees submitted by

the exclusive employee representative from among the three largest exclusive

9


employee representatives that does not have a trustee among the three trustee

positions;

(2) If a vacancy occurs in a trustee position described in section 87A-5(1)(B), then

the vacancy shall be appointed from a list of two nominees submitted by mutual

agreement of the exclusive employee representatives described in section 87A-

5(1)(B); and

(3) If a vacancy occurs in the retiree position described in section 87A-5(1)(C),

then the vacancy shall be appointed from a list of two nominees submitted by mutual

agreement of all eligible exclusive employee representatives.

If by the end of a trustee's term the trustee is not

reappointed or the trustee's successor is not appointed,

the trustee shall serve until the trustee's successor is

appointed. [L 2001, c 88, pt of §1; am L 2005, c 250, §2]

Explanatory Note

L 2005, c 250 amendment. The legislature concluded

that the governor's proclamation indicating the

governor's intent to return H.B. No. 1548 was

constitutionally defective and that said measure became

law. On July 13, 2005, the legislature assigned Act 250

to H.B. No. 1548. The attorney general has taken the

position that H.B. No. 1548 did not become law.

[§87A-7] Chair, vice-chair, and secretary-

treasurer. The trustees shall elect from among the

members a chair, a vice-chair, and a secretary-treasurer.

[L 2001, c 88, pt of §1]

[§87A-8] Compensation and expenses. Each trustee shall

serve without compensation, but the trustees may be

reimbursed from the fund for any reasonable expenses

incurred in carrying out the purposes of the fund. [L

2001, c 88, pt of §1]

[§87A-9] Legal adviser. The attorney general shall

serve as legal adviser to the board and shall provide

10


legal representation for the Hawaii employer-union health

benefits trust fund. [L 2001, c 88, pt of §1]

[§87A-10] Meetings; notice. Meetings may be scheduled,

and notice of meetings shall be provided as follows:

(1) The chairperson may call a meeting of the board at any time by giving at least

six calendar days' written notice of the time and place of the meeting to all trustees;

and

(2) A majority of the trustees may call a meeting of the board by giving at least ten

calendar days' written notice of the time and place to all other trustees. [L 2001, c 88,

pt of §1]

[§87A-11] Quorum; board actions; voting. (a) Six

trustees, three of whom represent the public employer and

three of whom represent employee-beneficiaries, shall

constitute a quorum for the transaction of business.

(b) Trustees representing the public employers

shall collectively have one vote. Trustees representing

the employee-beneficiaries shall collectively have one

vote.

For any vote of the trustees representing the public

employers to be valid, three of these trustees must

concur to cast such a vote. In the absence of such

concurrence, the trustees representing the public

employers shall be deemed to have abstained from voting.

For any vote of the trustees representing the

employee-beneficiaries to be valid, three of these

trustees must concur to cast such a vote. In the absence

of such concurrence, the trustees representing the

employee-beneficiaries shall be deemed to have abstained

from voting.

An abstention shall not be counted as either a vote

in favor or against a matter before the board.

(c) Any action taken by the board shall be by the

concurrence of at least two votes. In the event of a tie

vote on any motion, the motion shall fail. Upon the

concurrence of six trustees, the board shall participate

in dispute resolution. [L 2001, c 88, pt of §1]

11


[§87A-12] Records and minutes. The board shall keep

records and minutes of all meetings of the board. [L

2001, c 88, pt of §1]

PART III. BOARD POWERS AND DUTIES

[§87A-15] Administration of the fund. The board

shall administer and carry out the purpose of the

fund. Health and other benefit plans shall be provided

at a cost affordable to both the public employers and the

public employees. [L 2001, c 88, pt of §1]

[§87A-16] Health benefits plan; carriers. (a) The

board shall establish the health benefits plan or plans,

which shall be exempt from the minimum group requirements

of chapter 431.

(b) The board may contract for health benefits

plans or provide health benefits through a noninsured

schedule of benefits. [L 2001, c 88, pt of §1]

[§87A-16.3] Prescription drugs; mail order opt out

option. A Hawaii employer-union health benefits trust

fund health benefits plan shall permit each beneficiary

to fill any covered prescription in accordance with

chapter 431R. [L 2013, c 226, §3]

[§87A-17] Group life insurance benefits or group life

insurance program. The board may provide benefits under

a group life insurance benefits program or group life

insurance program to employees. [L 2001, c 88, pt of §1]

§87A-18 Long-term care benefits plan; carrier or third-

party administrator. (a) The board may establish a

long-term care benefits plan or plans for employee-

beneficiaries; the spouses, parents, grandparents, in-law

parents, and in-law grandparents of employee-

beneficiaries; and qualified-beneficiaries. The plan or

plans shall be at no cost to employers and shall comply

with article 10H of chapter 431.

12


(b) Notwithstanding any other law to the contrary,

long-term care benefits shall be available only to:

(1) Employee-beneficiaries and their spouses, parents, and grandparents;

(2) Employee-beneficiary in-law parents and grandparents; and

(3) Qualified-beneficiaries who enroll between the ages of twenty and eighty-five,

who comply with the plan's age, enrollment, medical

underwriting, and contribution requirements.

(c) The board may contract with a carrier to

provide fully insured benefits or with a third-party

administrator to administer self-insured benefits. [L

2001, c 88, pt of §1; am L 2004, c 216, §14]

[§87A-19] Plans for part-time, temporary, and seasonal

or casual employees. (a) The board may offer medical,

hospital, or surgical benefits plans to part-time,

temporary, and seasonal or casual employees at no cost to

the employers. The board may determine eligibility for

part-time, temporary, and seasonal or casual employees by

rules exempt from chapter 91 as provided in section 87A-

26.

(b) The board shall establish the medical,

hospital, or surgical benefits plan or plans, which shall

be exempt from the minimum group requirements of article

10A of chapter 431. The medical, hospital, or surgical

benefits plan or plans shall provide, pay for, arrange

for, or reimburse the cost of medical, hospital, or

surgical services, and may include prescribed hospital

in-patient and out-patient service and medical benefits.

(c) The board may contract for the medical,

hospital, or surgical benefits plan or plans. Each part-

time, temporary, and seasonal or casual employee enrolled

for medical, hospital, or surgical benefits shall pay

monthly contributions directly to the board's designated

carriers. The monthly contributions may include the

carrier's administrative costs. [L 2001, c 88, pt of §1]

13


§87A-20 REPEALED. L 2004, c 216, §45.

[§87A-21] Eligibility. (a) The board shall establish

eligibility criteria to determine who can qualify as an

employee-beneficiary, dependent-beneficiary, or

qualified-beneficiary, consistent with the provisions of

this chapter.

(b) A retired member of the employees' retirement

system; a county pension system; or a police,

firefighters, and bandsmen pension system of the State or

county, shall be eligible to qualify as an employee-

beneficiary:

(1) Regardless of whether the retired member was actively employed by the State

or county at the time of the retired employee's retirement; and

(2) Without regard to the date of the retired member's retirement.

(c) A dependent of a retired member shall be

eligible to qualify as an employee-beneficiary or

dependent-beneficiary:

(1) Regardless of whether the retired member was actively employed by the State

or county at the time of the retired employee's retirement; and

(2) Without regard to the date of the retired member's retirement. [L 2001, c 88, pt

of §1]

Case Notes

A retired employee's health benefits that are included

in a health benefits plan falls within the constitutional

protection contemplated by article XVI, §2 of the Hawaii

constitution inasmuch as subsection (b) clearly and

unambiguously conditions a retired state or county

government employee's eligibility for health benefits on,

inter alia, being a retired member of the employees'

retirement system. 122 H. 402, 228 P.3d 282.

14


[§87A-22] Benefits plan information and

enrollment. (a) The board shall make information

summarizing approved benefits plans available to each

employee-beneficiary. The information shall, to the

extent reasonably possible, be distributed to each

employee-beneficiary at the same time and in the same

manner.

(b) The board shall establish conditions and

procedures for benefits plan enrollment. [L 2001, c 88,

pt of §1]

§87A-23 Health benefits plan supplemental to

medicare. The board shall establish a health benefits

plan, which takes into account benefits available to an

employee-beneficiary and spouse under medicare, subject

to the following conditions:

(1) There shall be no duplication of benefits payable under medicare. The plan

under this section, which shall be secondary to medicare, when combined with

medicare and any other plan to which the health benefits plan is subordinate under the

National Association of Insurance Commissioners' coordination of benefit rules, shall

provide benefits that approximate those provided to a similarly situated beneficiary

not eligible for medicare;

(2) The State, through the department of budget and finance, and the counties,

through their respective departments of finance, shall pay to the fund a contribution

equal to an amount not less than the medicare part B premium, for each of the

following who are enrolled in the medicare part B medical insurance plan: (A) an

employee-beneficiary who is a retired employee, (B) an employee-beneficiary's

spouse while the employee-beneficiary is living, and (C) an employee-beneficiary's

spouse, after the death of the employee-beneficiary, if the spouse qualifies as an

employee-beneficiary. For purposes of this section, a "retired employee" means

retired members of the employees' retirement system; county pension system; or a

police, firefighters, or bandsmen pension system of the State or a county as set forth in

chapter 88. If the amount reimbursed by the fund under this section is less than the

actual cost of the medicare part B medical insurance plan due to an increase in the

medicare part B medical insurance plan rate, the fund shall reimburse each employee-

beneficiary and employee-beneficiary's spouse for the cost increase within thirty days

of the rate change. Each employee-beneficiary and employee-beneficiary's spouse

who becomes entitled to reimbursement from the fund for medicare part B premiums

15


after July 1, 2006, shall designate a financial institution account into which the fund

shall be authorized to deposit reimbursements. This method of payment may be

waived by the fund if another method is determined to be more appropriate;

(3) The benefits available under this plan, when combined with benefits available

under medicare or any other coverage or plan to which this plan is subordinate under

the National Association of Insurance Commissioners' coordination of benefit rules,

shall approximate the benefits that would be provided to a similarly situated

employee-beneficiary not eligible for medicare;

(4) All employee-beneficiaries or dependent-beneficiaries who are eligible to

enroll in the medicare part B medical insurance plan shall enroll in that plan as a

condition of receiving contributions and participating in benefits plans under this

chapter. This paragraph shall apply to retired employees, their spouses, and the

surviving spouses of deceased retirees and employees killed in the performance of

duty; and

(5) The board shall determine which of the employee-beneficiaries and dependent-

beneficiaries, who are not enrolled in the medicare part B medical insurance plan,

may participate in the plans offered by the fund. [L 2001, c 88, pt of §1; am L 2003, c

111, §1; am L 2006, c 39, §1]

Case Notes

The words "similarly situated beneficiary not eligible

for medicare", as those words are used in paragraph (1),

or "similarly situated employee-beneficiary not eligible

for medicare", as those words are used in paragraph (3),

invoke a comparison between medicare eligible retirees

and retirees who do not qualify for medicare; thus, this

chapter does not require the board of the employer-union

health benefits trust fund to provide health benefits

plans to retirees whose benefits "reasonably approximate"

those benefits provided to active employees. 122 H. 402,

228 P.3d 282.

§87A-24 Other powers. In addition to the power to

administer the fund, the board may:

16


(1) Collect, receive, deposit, and withdraw money on behalf of the fund;

(2) Invest moneys in the same manner specified in section 88-119;

(3) Hold, purchase, sell, assign, transfer, or dispose of any securities or other

investments of the fund, as well as the proceeds of those investments and any money

belonging to the fund;

(4) Appoint, and at pleasure dismiss, an administrator and other fund staff. The

administrator shall be exempt from chapter 76. Other fund staff may be exempt from

chapter 76 as determined by the board. The administrator and staff who are exempt

from chapter 76 shall serve under and at the pleasure of the board; provided that civil

service exempt positions under this section that are created after July 1, 2014, shall be

exempt from section 76-16(b)(17)(A);

(5) Make payments of periodic charges and pay for reasonable expenses incurred

in carrying out the purposes of the fund;

(6) Contract for the performance of financial audits of the fund and claims audits

of its insurance carriers;

(7) Retain auditors, actuaries, investment firms and managers, benefit plan

consultants, or other professional advisors to carry out the purposes of this chapter,

including the retaining of an actuary to determine the annual required public employer

contribution for the separate trust fund established under section 87A-42;

(8) Establish health benefits plan and long-term care benefits plan rates that

include administrative and other expenses necessary to effectuate the purposes of the

fund; and

(9) Require any department, agency, or employee of the State or counties to

furnish information to the board to carry out the purposes of this chapter. [L 2001, c

88, pt of §1; am L 2004, c 216, §15; am L 2013, c 268, §7; am L 2016, c 30, §2; am L

2017, c 145, §2]

Note

Changes to personnel and operations as a result of

authorization to employ staff through the civil service

17


system; reports to 2018-2019 legislature. L 2017, c 145,

§4.

[§87A-25] Other duties. The board shall:

(1) Authorize charges and payments from the fund only upon vouchers

countersigned by the chairperson and any other person designated by the board;

(2) Maintain accurate records and accounts of all financial transactions of the fund

that shall be audited annually and summarized in an annual report to the governor and

legislature;

(3) Maintain suitable and adequate records and provide information requested by

State and county employers as necessary to carry out the purpose of the fund;

(4) Procure fiduciary liability insurance and error and omissions coverage for all

trustees; and

(5) Procure a fidelity bond of a reasonable amount for the chairperson and any

other person authorized to handle fund moneys. [L 2001, c 88, pt of §1]

[§87A-26] Rules; policies, standards, and

procedures. (a) The board may adopt rules for the

purposes of this chapter. Rules shall be adopted without

regard to chapter 91. Rulemaking procedures shall be

adopted by the board and shall minimally provide for:

(1) Consultation with employers and affected employee organizations with regard

to proposed rules;

(2) Adoption of rules at open meetings that permit the attendance of any interested

persons;

(3) Approval of rules by the governor; and

(4) Filing of rules with the lieutenant governor.

(b) The board may also issue policies, standards,

and procedures consistent with its rules.

(c) The board may adopt rules, without regard to

chapter 91, governing dispute resolution procedures in

18


the event of impasse in decision-making; provided that

the rules shall be adopted with the concurrence of six

trustees. [L 2001, c 88, pt of §1]

[§87A-27] Actuarial investigation;

valuations. Beginning on July 1, 2017, the actuary

retained by the board pursuant to section 87A-42 shall

make an annual valuation of the assets and liabilities of

the fund based on tables and other factors adopted by the

board annually. The annual valuation shall include an

update of assumptions specific to the fund that are not

updated pursuant to section 88-105, as deemed necessary

by the actuary, at least once in each three-year period.

[L 2017, c 93, §2]

PART IV. TRUST FUND

§87A-30 Hawaii employer-union health benefits trust

fund; establishment. There is established outside the

state treasury, a trust fund to be known as the "Hawaii

Employer-Union Health Benefits Trust Fund". The fund

shall consist of contributions, interest, income,

dividends, refunds, rate credits, and other returns. It

is hereby declared that any and all sums contributed or

paid from any source to the fund created by this part,

and all assets of the fund including any and all interest

and earnings on the same, are and shall be held in trust

by the board for the exclusive use and benefit of the

employee-beneficiaries and dependent-beneficiaries and

shall not be subject to appropriation for any other

purpose whatsoever. The fund shall be under the control

of the board and placed under the department of budget

and finance for administrative purposes. [L 2001, c 88,

pt of §1; am L 2006, c 57, §3]

§87A-31 Trust fund; purpose. (a) The fund shall be

used to provide employee-beneficiaries and dependent-

beneficiaries with health and other benefit plans, and to

pay administrative and other expenses of the fund. All

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assets of the fund are and shall be dedicated to

providing health and other benefits plans to the

employee-beneficiaries and dependent-beneficiaries in

accordance with the terms of those plans and to pay

administrative and other expenses of the fund, and shall

be used for no other purposes except for those set forth

in this section.

(b) The fund, including any earnings on

investments, and rate credits or reimbursements from any

carrier or self-insured plan and any earning or interest

derived therefrom, may be used to stabilize health and

other benefit plan rates; provided that the approval of

the governor and the legislature shall be necessary to

fund administrative and other expenses necessary to

effectuate these purposes.

(c) The fund may be used to provide group life

insurance benefits to employees to the extent that

contributions are provided for group life insurance

benefits in sections 87A-32 and 87A-37.

(d) The fund may assist the State and the counties

to implement and administer cafeteria plans authorized

under Title 26 United States Code section 125, the

Internal Revenue Code of 1986, as amended, and section

78-30.

(e) At the discretion of the board, some or all of

the fund may be used as a reserve against or to pay the

fund's future costs of providing health and other

benefits plans established under sections 87A-23 and 87A-

37 and any other benefits plans the board establishes for

retired employees and their beneficiaries. The board may

create separate funds within the fund for this

purpose. Each separate fund shall be subject to all of

the provisions of this chapter.

(f) If after commencing the reimbursement of

medicare part B premiums in section 87A-23, or any other

debt payable under this chapter, the fund cannot locate

the employee-beneficiary or other person or entity

entitled to payment, further payment shall be forfeited

to the fund if the total amount is less than $500 and

shall not escheat under the laws of any state; provided

that the forfeited payment shall be restored if the

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employee-beneficiary, or other person or entity entitled

to the forfeited payment makes a proper application to

the fund for restoration of the benefit no later than ten

years following the last valid reimbursement or

payment. All applications for restoration of a forfeited

benefit or payment shall be in a form satisfactory to the

fund. For forfeited benefits or payments in existence on

June 30, 2017, the ten-year time limitation on claiming

the benefits or payments shall commence on July 1,

2017. [L 2001, c 88, pt of §1; am L 2006, c 57, §4; am L

2017, c 144, §2]

Revision Note

In subsection (d), reference to "section 78-30"

substituted for "part II of chapter 78".

[§87A-31.1] Public employers; defined. For the purposes

of this part, "public employer" means a governmental

entity whose employees', beneficiaries', and retirees'

health benefits coverage is provided through the fund. [L

2013, c 268, pt of §6]

[§87A-31.5] Employer contributions

irrevocable. Notwithstanding any law to the contrary,

all of the monthly contributions that the State and

counties make to the fund under sections 87A-32, 87A-33,

87A-34, 87A-35, 87A-36, and 87A-37, and all other

contributions that the State and counties may make to the

fund, shall be irrevocable; provided that this shall not

preclude the fund from returning contributions or

payments made by the State or any county under a mistake

of fact within one year after the payment of the

contributions or payments. [L 2006, c 57, §2]

§87A-32 State and county contributions; active

employees. (a) The State, through the department of

budget and finance, and the counties, through their

respective departments of finance, shall pay to the fund

a monthly contribution equal to the amount established

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under chapter 89C or specified in the applicable public

sector collective bargaining agreements, whichever is

appropriate, for each of their respective employee-

beneficiaries and employee-beneficiaries with dependent-

beneficiaries, which shall be used toward the payment of

costs of a health benefits plan; provided that:

(1) The monthly contribution shall be a specified dollar amount;

(2) The monthly contribution shall not exceed the actual cost of a health benefits

plan;

(3) If two employee-beneficiaries are married or in a civil union, the total

contribution by the State or the county shall not exceed the monthly contribution for a

family plan; and

(4) If the State or any of the counties establish cafeteria plans in accordance with

Title 26, United States Code section 125, the Internal Revenue Code of 1986, as

amended, and section 78-30, the monthly contribution for those employee-

beneficiaries who participate in a cafeteria plan shall be made through the cafeteria

plan, and the payments made by the State or counties shall include their respective

contributions to the fund and their employee-beneficiary's share of the cost of the

employee-beneficiary's health benefits plan.

(b) The State, through the department of budget and

finance, and the counties, through their respective

departments of finance, shall pay to the fund a monthly

contribution equal to the amount established under

chapter 89C or specified in the applicable public sector

collective bargaining agreement, whichever is applicable,

for each of their respective employees, to be used toward

the payment of group life insurance benefits for each

employee. [L 2001, c 88, pt of §1; am L 2019, c 51, §3]

Revision Note

In subsection (a)(4), reference to "section 78-30"


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§87A-33 State and county contributions; retired

employees. (a) Notwithstanding any law to the contrary,

this section shall apply to state and county

contributions to the fund for:

(1) The dependent-beneficiary of an employee who is killed in the performance of

duty;

(2) A dependent-beneficiary, upon the death of the employee-beneficiary, except

as provided in section 87A-36;

(3) An employee-beneficiary who retired after June 30, 1984, due to a disability

falling within sections 88-79 and 88-285;

(4) An employee-beneficiary who retired before July 1, 1984;

(5) An employee-beneficiary who:

(A) Was hired before July 1, 1996;

(B) Retired after June 30, 1984; and

(C) Who has ten years or more of credited

service, excluding sick leave;

(6) An employee-beneficiary who:

(A) Was hired after June 30, 1996; and

(B) Retired with twenty-five or more years of

credited service, excluding sick leave,

except as provided in section 87A-36; and

(7) Employees who retired prior to 1961 and their dependent-beneficiaries.

(b) Effective January 1, 2014, there is established

a base monthly contribution for health benefit plans that

the State, through the department of budget and finance,

and the counties, through their respective departments of

finance, shall pay to the fund, up to the following:

(1) $524.73 for each employee-beneficiary enrolled in supplemental medicare self

plans;

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(2) $1,051.70 for each employee-beneficiary enrolled in supplemental medicare

two-party plans;

(3) $1,531.78 for each employee-beneficiary enrolled in supplemental medicare

family plans;

(4) $736.60 for each employee-beneficiary enrolled in non-medicare self plans;

(5) $1,484.72 for each employee-beneficiary enrolled in non-medicare two-party

plans; and

(6) $2,173.06 for each employee-beneficiary enrolled in non-medicare family

plans.

The monthly contribution by the State or county

shall not exceed the actual cost of the health benefit

plan or plans and shall not be required to cover

increased benefits above those initially contracted for

by the fund for plan year 2004-2005. If two employee-

beneficiaries are married or in a civil union, the total

contribution by the State or county shall not exceed the

monthly contribution for a supplemental medicare family

or non-medicare family plan, as appropriate.

(c) The base composite monthly contribution shall

be adjusted annually, beginning January 1, 2015. The

adjusted base composite monthly contribution for each new

plan year (January 1 until December 31) shall be

calculated by increasing or decreasing the base composite

monthly contribution in effect through the end of the

previous plan year by the percentage increase or decrease

in the medicare part B premium rate for those years,

which percentage shall be calculated by dividing the

medicare part B premium rate in effect at the beginning

of the new plan year by the rate in effect at the

beginning of the previous plan year.

As used in this subsection, "medicare part B premium

rate" means the rate published in the Federal Register

each year on November 1 or on the business day closest to

November 1 of each year after the medicare part B premium

rate has been established by the United States Secretary

24


of Health and Human Services and approved by the United

States Congress.

(d) If the board adopts a rate structure that

provides for other than self and family rates for the

health benefit plans, the base monthly contribution for

the rate structure adopted by the board shall be adjusted

to provide the equivalent underwriting cost as the base

monthly contribution that is provided for in this

section. [L 2001, c 88, pt of §1; am L 2003, c 111, §2;

am L 2007, c 26, §1; am L 2012, c 38, §1; am L 2013, c

282, §1; am L 2019, c 51, §4]

[§87A-33.5] State and county contribution; reimbursement

for retired employees. Effective July 1, 2007, an

employee-beneficiary who retires and relocates outside of

the State shall be reimbursed for the premiums paid by

the employee-beneficiary for a personal health insurance

policy; provided that the board shall determine which

employee-beneficiaries and what types of personal health

insurance policies shall be eligible for reimbursement

and may set other conditions that shall be met for the

employee-beneficiary to receive the reimbursements

provided under this section.

The reimbursement shall be the lesser of:

(1) The actual cost of the personal health insurance policy; or

(2) The amount of the state or county contribution for the most comparable health

benefits plan.

Reimbursements shall be paid by the fund on a

quarterly basis upon the presentation of documentation

that the premiums for the personal health insurance

policy have been paid by the employee-beneficiary. This

section shall apply to all employee-beneficiaries who

retire and relocate outside of the State, regardless of

their date of retirement. [L 2006, c 167, §1]

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§87A-34 State and county contributions; retired

employees with fewer than ten years of

service. (a) This section shall apply to state and

county contributions to the fund for employees specified

in paragraph (1)(D) of the definition of "employee" in

section 87A-1 who:

(1) Were hired on or before June 30, 1996; and

(2) Retired after June 30, 1984, with fewer than ten years of credited service,

excluding sick leave.

(b) The State, through the department of budget and


departments of finance, shall pay to the fund a monthly

contribution equal to one-half of the base monthly

contribution set forth under section 87A-33(b) for

retired employees enrolled in medicare or non-medicare

health benefits plans. If two employee-beneficiaries are

married or in a civil union, the total contribution by

the State or county shall not exceed the monthly

contribution for supplemental medicare family or non-

medicare family plan, as appropriate. [L 2001, c 88, pt

of §1; am L 2017, c 12, §5; am L 2019, c 51, §5]

§87A-35 State and county contributions; employees hired

after June 30, 1996, but before July 1, 2001, and retired

with fewer than twenty-five years of service. (a) This

section shall apply to state and county contributions to

the fund for employees who were hired after June 30,

1996, but before July 1, 2001, and who retire with fewer

than twenty-five years of credited service, excluding

sick leave; provided that this section shall not apply to

the following employees, for whom state and county

contributions shall be made as provided by section 87A-

33:

(1) An employee hired prior to July 1, 1996, who transfers employment after June

30, 1996, and who cumulatively accrues at least ten years of credited service; and

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(2) An employee hired prior to July 1, 1996, who has at least ten years of credited

service prior to a break in service.

For the purposes of this section:

"Break in service" means to leave state or county

employment for more than ninety calendar days before

returning to state or county employment.

"Transfer" means to leave state or county employment

and return to state or county employment within ninety

calendar days.

(b) For purposes of this section, if an employee

leaves state or county employment and returns to state or

county employment after June 30, 1996, upon retirement,

the employee's years of service shall be computed in the

same manner as set forth in chapter 88.

(c) The State, through the department of budget and


departments of finance, shall pay to the fund:

(1) For retired employees enrolled in medicare or non-medicare health benefit

plans with ten or more years but fewer than fifteen years of service, a monthly

contribution equal to one-half of the base monthly contribution set forth under section

87A-33(b); and

(2) For retired employees enrolled in medicare or non-medicare health benefit

plans with at least fifteen but fewer than twenty-five years of service, a monthly

contribution of seventy-five per cent of the base monthly contribution set forth under

section 87A-33(b).

If two employee-beneficiaries are married or in a civil

union, the total contribution by the State or county

shall not exceed the monthly contribution for a

supplemental medicare family or non-medicare family plan,

as appropriate. [L 2001, c 88, pt of §1; am L 2004, c

184, §1; am L 2019, c 51, §6]

§87A-36 State and county contributions; employees hired

after June 30, 2001, and retired. (a) This section

shall apply to state and county contributions to the fund

for employees hired after June 30, 2001, and who retired,

27


except that this section shall not apply to the following

employees, for whom state and county contributions shall

be made as provided by section 87A-35:

(1) An employee hired after June 30, 1996, and prior to July 1, 2001, who

transfers employment after June 30, 2001, and who cumulatively accrues at least ten

years of credited service; and

(2) An employee hired after June 30, 1996, and prior to July 1, 2001, who has at

least ten years of credited service prior to a break in service.

For purposes of this section:

"Break in service" means to leave state or county

employment for more than ninety calendar days before

returning to state or county employment.

"Transfer" means to leave state or county employment

and return to state or county employment within ninety

calendar days.

(b) For purposes of this section, if an employee

leaves state or county employment and returns to state or

county employment after July 1, 2001, upon retirement,

the employee's years of service shall be computed in the

same manner as set forth in chapter 88.

(c) The State, through the department of budget and


departments of finance, shall pay to the fund:

(1) For retired employees based on the self plan with ten or more years but fewer

than fifteen years of service, a monthly contribution equal to one-half of the base

medicare or non-medicare monthly contribution set forth under section 87A-33(b);

(2) For retired employees based on the self plan with at least fifteen but fewer than

twenty-five years of service, a monthly contribution equal to seventy-five per cent of

the base medicare or non-medicare monthly contribution set forth under section 87A-

33(b);

(3) For retired employees based on the self plan with twenty-five or more years of

service, a monthly contribution equal to one hundred per cent of the base medicare or

non-medicare monthly contribution set forth under section 87A-33(b); and

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(4) One-half of the monthly contributions for the employee-beneficiary or

employee-beneficiary with dependent-beneficiaries upon the death of the employee,

as defined in paragraph (1)(D) of the definition of "employee" in section 87A-1[.]

If two employee-beneficiaries are married or in a

civil union, the total contribution by the State or

county shall not exceed the monthly contribution for two

supplemental medicare self or non-medicare self plans, as

appropriate. [L 2001, c 88, pt of §1; am L 2004, c 184,

§2; am L 2017, c 12, §6; am L 2019, c 51, §7]

[§87A-37] Group life insurance benefits plans for

retired employees; contributions. (a) The State,

through the department of budget and finance, and the

counties, through their respective departments of

finance, shall pay to the fund a base monthly

contribution as set forth in subsection (b) for each

retired employee enrolled in the fund's group life

insurance benefits plan under section 87A-34, 87A-35, and

87A-36.

(b) Effective July 1, 2003, there is established a

base monthly contribution of $4.16 for each retired

employee enrolled in a group life insurance plan;

provided that the monthly contribution shall not exceed

the actual cost of the group life insurance benefits

plan. The base composite monthly contribution shall be

adjusted annually beginning July 1, 2004. The adjusted

base composite monthly contribution for each new plan

year shall be calculated by increasing or decreasing the

base composite monthly contribution in effect through the

end of the previous plan year by the percentage increase

or decrease in the medicare part B premium rate for those

years. The percentage shall be calculated by dividing

the medicare part B premium rate in effect at the

beginning of the new plan year by the rate in effect

through the end of the previous plan year.

As used in this subsection, "medicare part B premium

rate" means the rate published in the Federal Register

each year on November 1 or on the business day closest to

November 1 of each year after the medicare part B premium

29


rate has been established by the Secretary of Health and

Human Services and approved by the United States

Congress. [L 2001, c 88, pt of §1]

[§87A-38] State and county contributions not considered

wages or salary. Contributions made by the State or the

counties under this part shall not be considered wages or

salary of an employee-beneficiary. No employee-

beneficiary shall have any vested right in or be entitled

to receive any part of any contribution made to the fund.

[L 2001, c 88, pt of §1]

[§87A-39] Reimbursement for state

contributions. (a) All state agencies having control of

funds other than the general fund shall reimburse the

State for contributions made by the State pursuant to

sections 87A-32, 87A-33, 87A-34, 87A-35, 87A-36, and 87A-

37 on account of agency employees whose compensation is

paid in whole or part from funds other than the general

fund.

(b) All state and county agencies receiving federal

funds, which may be expended for the purpose of replacing

the contributions payable by the State to the fund, shall

set aside a portion of the federal funds sufficient to

reimburse the State for contributions made by the State

pursuant to sections 87A-32, 87A-33, 87A-34, 87A-35, 87A-

36, and 87A-37, on account of the employees in the

agencies whose compensation is paid in whole or part from

federal funds. [L 2001, c 88, pt of §1]

[§87A-40] Employee-beneficiary contributions; health

benefit plans. (a) Each employee-beneficiary shall make

a monthly contribution to the fund amounting to the

difference between the monthly charge of the health

benefits plan selected by the employee-beneficiary and

the contribution made by the State or county for the

employee-beneficiary to the fund. Nothing in this

section shall prohibit any employee-beneficiary from

30


participating in a cafeteria plan authorized under Title

26 United States Code section 125, Internal Revenue Code

of 1986, as amended, and section 78-30.

(b) During the period the health benefits plan

selected by an employee-beneficiary is in effect, the

employee-beneficiary, if allowed by law, shall authorize

the employee-beneficiary's contribution to be withheld

and transmitted to the fund monthly by the comptroller,

employees' retirement system, or finance officer who

disburses the employee-beneficiary's compensation,

pension, or retirement pay. If an employee-beneficiary's

contribution to the fund is not withheld and transmitted

to the fund, the employee-beneficiary shall pay the

monthly contribution:

(1) In the case of an employee-beneficiary who normally receives the employee-

beneficiary's compensation from the comptroller or employees' retirement system,

directly to the fund by the first day of each month; or

(2) In the case of all other employee-beneficiaries, to the respective finance officer

from whom the employee-beneficiary normally receives compensation for transmittal

to the fund by the first day of each month.

(c) Notwithstanding subsection (a), an employee-

beneficiary's monthly contribution to the fund shall

include the amount that would have been the employee-

beneficiary's contribution if the employee-beneficiary

had not elected to participate in the cafeteria plan. [L

2001, c 88, pt of §1]

Revision Note

In subsection (a), reference to "section 78-30"


[§87A-41] Employee-beneficiary or qualified-beneficiary

contributions; long-term care benefits plan. (a) During

the period the long-term care benefits plan is in effect,

the employee-beneficiary, if allowed by law, shall

authorize the employee-beneficiary's contribution to be

31


withheld and transmitted to the fund monthly by the

comptroller, employees' retirement system, or finance

officer who disburses the employee-beneficiary's

compensation, pension, or retirement pay. If an

employee-beneficiary's monthly contribution to the fund

is not withheld and transmitted to the fund, the

employee-beneficiary shall pay the monthly contribution

directly to the board's designated carrier or third-party

administrator as specified by the board.

(b) Qualified-beneficiaries shall pay monthly

contributions directly to the board's designated carrier

or third-party administrator as specified by the board.

[L 2001, c 88, pt of §1]

§87A-42 Other post-employment benefits

trust. (a) Notwithstanding sections 87A-31 and 87A-

31.5, the board, upon terms and conditions set by the

board, shall establish and administer a separate trust

fund for the purpose of receiving employer contributions

that will prefund other post-employment health and other

benefit plan costs for retirees and their

beneficiaries. The separate trust fund shall meet the

requirements of the Government Accounting Standards Board

regarding other post-employment benefits trusts. The

board shall establish and maintain a separate account for

each public employer within the separate trust fund to

accept and account for each public employer's

contributions. Employer contributions to the separate

trust fund shall be irrevocable, all assets of the fund

shall be dedicated exclusively to providing health and

other benefits to retirees and their beneficiaries, and

assets of the fund shall not be subject to appropriation

for any other purpose and shall not be subject to claims

by creditors of the employers or the board or plan

administrator. The board's powers under section 87A-24

shall also apply to the fund established pursuant to this

section.

(b) Public employer contributions shall be paid

into the fund in each fiscal year, and commencing with

the 2018-2019 fiscal year, the amount of the annual

32


public employer contribution shall be equal to the amount

of the annual required contribution, as determined by an

actuary retained by the board.

(c) In any fiscal year subsequent to the 2017-2018

fiscal year in which the state public employer's

contributions into the fund are less than the amount of

the annual required contribution, the amount that

represents the excess of the annual required contribution

over the state public employer's contributions shall be

deposited into the appropriate account of the separate

trust fund from a portion of all general excise tax

revenues collected by the department of taxation under

section 237-31.

If any general excise tax revenues are deposited

into the separate trust fund in any fiscal year as a

result of this subsection, the director of finance shall

notify the legislature and governor whether the general

fund expenditure ceiling for that fiscal year would have

been exceeded if those revenues had been legislatively

appropriated instead of deposited without appropriation

into the trust fund. The notification shall be submitted

within thirty days following the end of the applicable

fiscal year.

(d) In any fiscal year subsequent to the 2017-2018

fiscal year in which a county public employer's

contributions into the fund are less than the amount of

the annual required contribution, the amount that

represents the excess of the annual required contribution

over the county public employer's contributions shall be

deposited into the fund from a portion of all transient

accommodations tax revenues collected by the department

of taxation under section 237D-6.5(b)(4). The director

of finance shall deduct the amount necessary to meet the

county public employer's annual required contribution

from the revenues derived under section 237D-6.5(b)(4)

and transfer the amount to the board for deposit into the

appropriate account of the separate trust fund.

(e) In any fiscal year subsequent to fiscal year

2017-2018 in which a public employer's contributions into

the fund are less than the amount of the annual required

contribution and the public employer is not entitled to

33


transient accommodations tax revenues sufficient to

satisfy the total amount of the annual required

contribution, the public employer's contributions shall

be deposited into the fund from portions of any other

revenues collected on behalf of the public employer or

held by the State. The director of finance shall deduct

the amount necessary to meet the public employer's annual

required contribution from any revenues collected on

behalf of the public employer held by the State and

transfer the amount to the board for deposit into the

appropriate account of the separate trust fund.

(f) For the purposes of this section, "annual

required contribution" means a public employer's required

contribution to the trust fund established in this

section that is sufficient to cover:

(1) The normal cost, which is the cost of other post-employment benefits

attributable to the current year of service; and

(2) An amortization payment, which is a catch-up payment for past service costs

to fund the unfunded actuarial accrued liability over the next thirty years. [L 2012, c

304, §1; am L 2013, c 268, §8; am L 2015, c 121, §4]

Note

Authorization to create fund requires Government

Accounting Standards Board requirements. L 2012, c 304,

§2.

Public employer contributions into trust fund (fiscal

period 2014-2019). L 2013, c 268, §11.

[§87A-43] Payment of public employer contributions to

the other post-employment benefits

trust. (a) Commencing with fiscal year 2018-2019, each

of the counties and all other public employers shall make

annual required contributions in accordance with section

87A-42 for the benefit of their retirees and

beneficiaries.

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(b) The board shall determine the annual required

contribution owed by each public employer under this part

for each fiscal year, beginning with fiscal year 2018-

2019. [L 2013, c 268, pt of §6]

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chapter 87a hawaii employer-union health benefits trust fund

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